Intermediated Trade and Credit Constraints: The Case of Firm's Imports

Francesco Nucci, Filomena Pietrovito () and Alberto Pozzolo

Economics & Statistics Discussion Papers from University of Molise, Department of Economics

Abstract: Growing evidence suggests that a large share of international trade transactions are made through intermediaries and that whether firms use them or not depends on different factors. The aim of this paper is to empirically investigate if credit constraints introduce a degree of difference among firms in their mode of importing. Building on the intuition provided by a simple theoretical framework, we use firm-level data from 66 developing and developed countries to test the possible links between credit constraints and reliance on import intermediaries. Our results show that indeed credit-constrained firms exhibit a higher probability of importing their inputs using an intermediary, while unconstrained firms are more likely to import directly. Our results also establish that the impact of credit constraints on the probability of indirect importing is amplified for firms with a higher distance from their international sourcing network. Moreover, if firms face other types of frictions to import, then the probability that credit-constrained firms rely on intermediaries is estimated to be higher. Remarkably, credit rationing affects the probability of indirect importing no matter what the mode of exporting is.

Keywords: Firms' Import Mode; Trade Intermediaries; Financial Constraints (search for similar items in EconPapers)
JEL-codes: F10 F14 F36 G20 (search for similar items in EconPapers)
Pages: 43
Date: 2022-04-11
New Economics Papers: this item is included in nep-cfn and nep-int
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Published in International Economics, 175, 201-220, https://doi.org/10.1016/j.inteco.2023.08.003

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Related works:
Journal Article: Intermediated trade and credit constraints: The case of firm’s imports (2023)
Working Paper: Intermediated Trade and Credit Constraints: The Case of Firm's Imports (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:mol:ecsdps:esdp22084

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